Mixed-method analysis identifies key factors influencing loan defaults in bank customers, highlighting credit appraisal and economic conditions.
This paper explored the determinants of loan defaults among the CRDB, NMB, TPB and EXIM bank customers in Iringa Municipality, Tanzania. A mixed method approach was used and 140 borrowers and 8 banking employees were questioned and interviewed. Quantitative analysis used descriptive statistics and correlation and regression analyses; qualitative data was collected through in‐depth interviews. The result suggests that bank specific variables such as high interest rate, weak credit appraisal system and lack lustering in monitoring are the major cause of default. Borrower-side factors such as the use of loan funds and unemployment, and macro factors such as inflation and income tax, also play significant roles. The analysis is informed by theories derived from the Individual Lending Model and the Theory of Planned Behavior. Although the study was conducted in one town, it has implications for wider policy measures in Tanzania. The study calls for strengthening credit appraisal, training and policy overhauls to control such defaults.
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Nahonyo et al. (2025) studied this question.